Beer and Wine in Stores Would Boost Ontario Taxes: Report

Aug. 20 (Bloomberg) -- Breaking down Ontario’s prohibition-era liquor laws to allow local stores to sell alcohol would
lower prices while generating more revenue for the government
than current “quasi-monopolies,” according to a new report.

Alcohol can only be sold in Canada’s most populous province
through government-run stores, a beer retailer majority-owned by
Anheuser-Busch Inbev NV and Molson Coors Brewing Co., and a
chain of wine stores operated by the country’s two largest
winemakers.

“The lack of competition in Ontario’s system for alcoholic
beverage retailing causes higher prices for consumers and
foregone government revenue,” the C.D. Howe Institute, an
economic-policy research firm, said in a report today.

The Liquor Control Board of Ontario, one of the world’s
largest buyers of alcohol, reported C$5 billion ($4.6 billion)
in sales in the year ended March 2014 and delivered C$1.74
billion to government coffers, according to its website. The
LCBO also transferred C$791 million in sales taxes to the
government while the Beer Store delivered C$1 billion in taxes,
according to the Toronto-based C.D. Howe.

In British Columbia and Alberta, where there is some
privatization of liquor sales, revenue to government was about 7
percent higher than in provinces with government-run stores. A
more competitive liquor market in Ontario could increase
alcohol-related revenue to the government through taxes on
increased sales and efficiencies gained from cutting costs, the
report said.

Clark Review

Toronto-Dominion Bank Chief Executive Officer Ed Clark is
conducting a review of provincial assets, including the LCBO,
for Ontario’s Liberal government as it battles a deficit it
expects to reach C$12.5 billion at the end of March. The asset
review is to be completed by year-end.

“We believe Ontarians are well-served by the current
model,” Susie Heath, a spokeswoman for Finance Minister Charles
Sousa, said in an e-mailed statement.

There may be opportunities for the private sector to own or
run “components” of the LCBO, Sousa said in April.

For now, the LCBO is opening kiosks in 10 grocery stores in
the province. “Ontario’s wine and beer industries are an
important part of the province’s economy and we are committed to
building on their success,” Heath said.